Question

Which of the following statements describing a corporation is TRUE? O A. When ownership of a corporation changes, the corporation terminates. O B. Shareholders are the creditors of a corporation OC. Shareholders own the business and manage its day-to-day operations OD. A corporation is subject to greater governmental regulation than a proprietorship or a partnership

Answer 1

The correct answer is D.

A. FALSE. When the ownership changes, the corporation do not terminates. There is a change in the ownership pattern and control but this does not amount to the termination of the corporation.

B. FALSE. Shareholders are the owners of the corporation and not the creditors. They buy the stock or shares of the corporations and this does not amounts to extending of credit or borrowing money.

C. FALSE. Shareholders own the business but the management of the day-to-day activities is done by the management of the company, comprising of Directors, or Key Managerial Personnel. Although shareholders can be the directors of the corporation, but they do not manage the activities of the corporation unless they are appointed as the directors of the same.

D. TRUE. A corporation is subject to greater taxation as compared to proprietorship and partnership. There are not only greater amount of taxation rates but also more taxation laws and rules governing the corporation.

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